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Watches of Switzerland achieves year-on-year sales growth since post-lockdown reopening

The retailer expects a continued strong luxury watch market in the UK and US throughout the year

Watches of Switzerland Group PLC - Watches of Switzerland achieves year-on-year sales growth post-reopening

Watches of Switzerland Group PLC (LON:WOSG) has said it achieved year-on-year sales growth in June and July after stores were allowed to reopen following the coronavirus (COVID-19) pandemic lockdown.

The retailer added that it expects a continued strong luxury watch market in the UK and US throughout the year, so it has guided for total revenue of £840mln-£860mln assuming that there are no further lockdowns in its markets.

READ: Watches of Switzerland expects prolonged downturn in airport traffic post-lockdown

Domestic demand is forecast to remain “buoyant” but airport traffic and tourism is estimated to remain under pressure, it said.

The group's revenue for the 13 weeks to July 26, 2020, dropped by 27% to £151mln, recovering to a 7% rise in July through a flat performance in June from an 83% slump in May, as stores traded for 38% of potential trading hours due to lockdowns.

In the UK, revenue was down by a third to £108mln, with sales up 1% in June and July, having been down 86% in May.

The US division saw a stronger recovery, with revenue down 20% to £43mln, sales jumping 27% in July after a 3% dip in June and a 73% fall in May.

Net debt at the end of the quarter was £91mln with financial headroom of £161mln.

In the year to April 26, 2020 revenue advanced 5% to £810mln, while adjusted underlying earnings (EBITDA) jumped by 14% to £78mln, the FTSE 250-listed group said.

"Once more normal trading conditions return we believe that management can continue to leverage its market-leading position and implement its strategy of format enhancement," analysts at Shore Capital commented. 

"We wonder whether the current market conditions may accelerate a fallout of the competitor set and enable the company to take advantage of both its market-leading position and balance sheet strength to further consolidate the market with potential bolt-on acquisitions, noting the confident tone to emerge stronger despite the short term headwinds."

Shares shot up 15% to 302.02p on Thursday morning.

--Adds analyst comment, shares--

Quick facts: Watches of Switzerland Group PLC

Price: 320 GBX

LSE:WOSG
Market: LSE
Market Cap: £766.26 m
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